King Digital Entertainment plc, an interactive entertainment company, develops and publishes casual games on Web and mobile platforms. The company offers approximately 190 fun titles in over 200 countries through its king.com and royalgames.com Websites; Facebook; and mobile distribution platforms, such as the Apple App Store, Google Play Store, and Amazon Appstore. King Digital Entertainment plc is based in Dublin, Ireland.
Take a look at the 1-year chart of King Digital Entertainment PLC (NYSE: KING) below with my added notations:
Over the last 2 months KING created a key trendline of support (blue) and that line is also the “neckline” support for the stock’s head and shoulders (H&S) reversal pattern. Above the neckline you will notice the H&S pattern itself (red). Confirmation of the H&S would occur if KING breaks its trendline support.
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The Tale of the Tape: KING has formed a head & shoulders pattern. A long trade could be made at $15 with a stop placed below that level, but ideally, the pattern implies a short trade to be entered on a break below $15 instead.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
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